see you next sunday. >> i'm chris wallace. it's 30 days and counting until we go over the fiscal cliff. >> the president is demanding higher tax rates. congressional republicans want deeper spending cuts and entitlement reform. will they make a deal before we bring in the new year with a round of tax increases for all of us? we will ask the two men at the center of the negotiations where we really stand. for the president, treasury secretary timothy geithner. for the gop house speaker john

boehner. geithner and boehner only on fox news sunday. plus, we've seen this movie before. the two parties edging closer and closer to the brink. we will ask our sunday panel whether we will get a happy ending or an economic disaster. and our power player of the week. a young beauty queen has to make a tough choice. all right now on fox news sunday. >> hello again from fox news in washington. well, we had quite a day around here friday with talks to avoid the fiscal cliff deadlock, and everyone saying the other side is to blame, pressure secretary geithner scheduled a ground of interviews. then friday afternoon, speaker boehner's office called to say he wanted to come on fox news sunday to tell his side of the story. you will hear from bain -- john bainner a few minutes.

first my conversation with tim geithner about the lack of progress in steering away from the cliff. >> secretary geithner, welcome back to fox news sunday. >> nice to see you, chris. >> i spoke with house speaker boehner before you came over here. he said when you presented your plan to him on thursday he said, "you can't be serious" and mitch mcconnell, the republican leader, said he burst into laughter. >> chris, they are in kind of a tough position now. it's obviously a little hard for them now and they are trying to figure out where they go next. we might need to give them a little bit of time to figure out where they go next. but what we did, we laid out a very detailed, carefully-designed set of spending, savings and tax changes to help put us back on a path of fiscal responsibility, to prevent taxes from going up for 98% of investments and provide some investment for things we need liken fraught structure. we think that's what is good for the economy. if they have different suggestions and want to go

further in some areas, they should lay it out to us. >> you say they are in a hard spot, what do you mean? >> they are trying to figure out how to find a way to support things that they know they are going to have to do that will be very hard for them. you've heard them for the first time in two decades now acknowledge that they are willing to have revenues go up as part of the balanced plan. that's a it good first step but they have to tell us what they are willing to do on rates and revenues. and they have to tell us on the spending side if they want to go beyond where we are or do it differently and they have to tell us what makes sense to them. what we can't do, chris; try to figure out what works for them. >> the president campaigned for re-election on the idea of a, quote, balanced approach, end quote, to deficit reduction. a mixture of tax increases and spending cuts. here's the plan that the republicans say you presented to them this week. >> i can tell you what i presented if it would be helpful. >> let me ask you. >> but it's our plan. why don't you let me do t why

don't you let me explain it. >> well, i would like to ask you about this part of it and then anything i leave out you can tell me. 1.$6 trillion in tax increases, more than $80 billion in new stimulus spending next year, and an unspecified nonguaranteed spending cuts. question, is that your idea of balance? >> it is. let me explain what is in this plan that they didn't report to you and they didn't explain to people, which is we have proposed alongside the trillion dollars in spending cuts, we agreed with republicans last year on defense and other range ever programs, we proposed $600 billion of detailed reforms and savings to our healthcare and medicare programs. that's $600 billion. in fact, the healthcare savings in that plan are larger than the plans we've seen republicans in the past. >> is that what was in the budget? >> these proposals, we proposed these things last fall and in the president's budget. they are very detailed. >> but that was a budget that

was voted down 99-0 in the senate. >> this is a lot of politics happen in this town. but this is a very carefully designed set of reforms and if republicans would like to go beyond these reforms or do it differently, they should tell us how they want to do it. >> what if they were to propose the republican budget that they passed, that they passed the last two years? >> there's no risks they are going to do that, chris. >> wouldn't be as serious as you proposing your budget. >> but the american people took a long time to take a careful, long look at that plan, and they found no merit in it so the republicans aren't going to propose that again. >> just like the senate voted 99-0 against your budget. >> the senate has already proposed and enacted a middle class tax extension that protects 98% of americans from their taxes going up. and we proposed very substantial additional spending reforms alongside what we did last year, which is $1 trillion to get us to a broader fiscal balance. chris, you referred to things

that helped make the economy stronger in the short term. let me tell you why we propose that. what we are suggesting is we work to rebuild the country's infrastructure rather than putting it off. it doesn't save money to put it off. and extend unemployment benefits and make it he's year for americans to refinance their mortgages, take advantage of lower interest rates. we proposed taxes for business investment, and we proposed how to do that in a fiscally responsible way we can afford to pay for. so we matched those proposals with spending savings that together as part of this plan get us down to the point where we stay lies our debt and that's the critical test. >> let me drill down into just the spending part of this equation. here are the spendingic keys you are proposing. $150 billion in stimulus public works projects over several years. a $30 billion extension of unemployment insurance for one year. extension of payroll tax cuts. mortgage relief. deferral of automatic cuts for doctors in medicare. here are the spending cuts. unspecified savings from

nonentitlement programs next year -- let me just finish -- and the promise of $400 billion in savings from entitlement programs it be worked out next year with no guarantees. speaker boehner says even if you get all of that, it's a net increase in spending, not a net cut. >> not true. let me explain why. again, those investments in infrastructure, extending unemployment benefits, those are very important things and they are very good things and we can afford them. they have a modest costs and we can pay for them. as opposed to what you just said, we proposed $600 billion in preforms to mandatory programs over ten years and he better prepared to do a substantial portion of those up front in ways that are measurable so we can replace the much more damaging sequester. so when republicans say to us we want to see spending savings locked in up front we shall say we agree with you and we are prepared to do that. you have to give us some sense what you think we should do up

front and what we should do in a second stage and we are wait to go hear that from them. if they need more time to figure out what they want to do, that's okay but we don't have that much time. and they have to commit to all americans they aren't going to let tacks go up tore 98% of americans. >> i just have one more question before moving to taxes. bowles-simpson report has a proposal. what is your ratio? >> roughly 2 to 1. the bowles-simpson commission also proposed about $2.5 billion in revenues over the ten years relative to others. we proposed modest increase in revenues alongside the savings. >> you said $1.6 trillion is a modest proposal? >> it is. remember, chris, we are -- >> they were three to one. >> hold on. again, we are -- it's true, we aren't three to one, we are roughly two to one. we think that's a better way to do it.

again, what we are trying to do is to make sure this we are strengthening medicare, not shifting costs to seniors and creating room to things that are important in the future. >> le go to taxes. the president has made it very clear and clear during the campaign he will not extend the bush tax cuts on the top earners. does he insist on raising the top rate from 35% all the way up to the clinton rate of 39.6% or would he compromise on something lower like 37%? is that negotiable wench aren't going to ten the extension of the tax rates for the top two%. we think they should go back and need to go back to the clinton level and let me tell you why i believe that. >> specifically, you are saying nonneglectable, 39.6%. >> we think that's the way to do it and let me explain why. if you don't do that it costs roughly $1 trillion over ten years. >> not if you went to 37%. >> again, you are -- >> that's one of the ideas that's out there, sir. i'm not just making it up.

>> eats true there are lots of ideas out there. we are proposing to let the rates go back to clinton levels. that was a time of remarkably good economic growth in the country. strong private investment, strong job growth and strong growth in next. it was a good time for the american economy. makes a lot of sense. but in addition to that we propose to limit deductions for the top two percent of americans as well. we are willing to work with republicans on tax reform to create a more simple and fair system but only part of an agreement that has the rates go back up at the end of the year. >> 39.6%? >> and the reason eye why -- >> i understand the reason why. >> if you don't do that, you have to ask yourself where, whose taxes are you going to raise? where are you going to fine the money to bring a balanced plan in place that reduces our long-term deficit? >> how does that go for the economy if we go over the cliff? >> the american economy? >> yes. >> it would be very damaging. there's no reason it should happen. the only reason it would happen

is if a group of members of congress decide they are going to block an agreement because they want to extend tax rates for the rich that we can't afford. that's the only reason that will happen. >> or they now say because you are not willing to cut spending must have. >> that's not true. if they want to do more on the spending side than the $600 billion we want to propose on the top we already enacted on top of the savings from the wars, they can tell us how. >> savings in wars we were never going to fight? >> that's not true. as you know, we are winding down two wars. >> i understand that. and you are counting on savings nobody thought urn going to spend that money anyway. it's a budget gimmick, sir. >> no, that's not right. let's say it this way. those were expensive wars not just in american lives but in terms of taxpayer resources and when you end them as the president is doing, they reduce our long-term deficits. and like in the republican budget proposals, the world should reflect and recognize what that does in savings. we propose to use those savings to reduce the deficits and invest in rebuilding america. we think is makes a lot of sense. >> but it was money that wasn't

going to be spent anyway. >> if those wars had gone on it would be spent. >> i understand but you are not ending the wars for budget purposes, you are ending the wars because of a foreign policy decision. the wars weren't going to be fought. you aren't really saving money. it's a budget gimmick but it's not money you were going to spend. >> no, it's not a budget gimmick. the republicans propose it as a budget gimmick? >> sure, absolutely. >> then you should address it to them. >> but i'm addressing it to you. >> it's a basic challenge we face. this is the challenge we face which is how to bring the deficits down over time. it will require spending, savings and increase in rates and revenues. we think we can do that. we will work hard to do that and we have a good chance do it. no reason we can't do it. >> last question. can you promise we will not go over the cliff? >> no, i can't promise that. that's a decision that lies in the hands of the republicans that are now opposing increases in tax rates. if they recognize reality that we can't afford to extend those tax rates, then we have the basis for an agreement to be very good for the american people. >> and the president bears no

responsibility, it's all up to the republicans? >> chris, and yourself this question. why does it make sense for the country? to force tax increases on all americans because a small group of republicans want to extend tax rates for 2% of americans. why does that make any sense? there's no reason why that should happen. we can't afford those tax rates. that's like the deep tragic let son of the last decade. he we can't afford them so we around going to get to the end now without a recognition of republicans of that basic reality. that will be the responsible thing to do. and my judgment is they are going to do it because there's no alternative to that. >> mr. secretary, thank you. always a pleasure to talk with you. >> good to see you. >> up next you will hear from speaker of the house john boehner. he industries his reaction when geithner presented the white house plan and he lays out what it will take to get a deal. it's a fox news sunday exclusive. ckles ] right, baby. oh, sir. that is a customer.

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>> as we said, house speaker john boehner's office called us to say he wants to come on our program to tell his side of the story. he said the president wants to ram rod through a plan and not work out a compromise and boehner might, he suggests, willing to go over the cliff. >> speaker boehner, welcome back to fox news sunday. >> good to be with. >> how would you characterize what geithner asked you on behalf of the president this week? >> a nonserious proposal. the president is asking for $1.6 trillion worth of new revenue over ten years, twice as much as he's been asking for in public. he has stimulus spending in here that exceeded the amount of new cuts that he was willing to consider. it was not a serious offer.

>> you are saying that there is more spending than spending cuts? >> that is correct. they outlined, they would be willing to talk about $400 billion worth of cuts but at then of the year they wanted to extend unemployment benefits and new program for infrastructure and they wanted to extend some other tax breaks and all the new stimulus spending would literally be more than the spending cuts he was willing to put on the table. now, understand, chris, the day after the election i saw the results. i went to the cameras and made it clear that republicans were willing to put revenue on the table if there were serious spending cuts and reforms put in place. we've talked about it. the president and the white house have had three weeks. this is the best we've got? >> take us behind the scenes. take us inside the room. what was the mood music when tim

geithner sits there like we are here and presented this to you? what did you say? >> flabbergasted. i looked at him and said you can't be serious. i've never seen anything like it. we have seven weeks between election day and the end of the year. and three of those weeks have been wasted with this nonsense. >> if they are wasted, where are we now and quite frankly, what are the chances we are going to end up going over the cliff? >> right now i would say we are nowhere period. we are nowhere. we've put a serious offer on the table by putting revenues up there to try to get this question resolved. but the white house has responded with virtually nothing. they have actually asked for more revenue than they have been asking to the whole entire time. >> what are the chances we are going to go over the cliff in. >> listen, going over the cliff will hurt our economy, will hurt job creation in our country and it's not fair to the american people. and this isn't an issue about democrats or republicans, my goodness, this is about our

country. we get serious about dealing with the problems at the end of the year and we need to get serious about our deficit and our debt that are burying our children's future. >> i want to ask you one other question about their offer because this was a real surprise. geithner also said they want you, congress, to give up any powers over voting an increase in the debt limit forever. >> forever. silliness. congress is never going to give up this power. i've made it clear to the power that every time we get to the debt limit, we need cuts and reforms that are greater than the increase in the debt limit. it's the only way to leverage the political process to produce more change than it would if left alone. >> the president and democrats are saying, look, we have already agreed since 2010, since the republican victory, to more than a trillion dollars in spending cuts without any increase in revenue so we've already given. >> but it doesn't solve the

problem. we have a debt burden that is crushing us. and you look at the president's budget, we have trillion dollars deficits for as far as the eye can see. this is unsustainable. we have ten thousand baby boomers like me retiring every day. 70,000 this week. 3.5 million retirees this year alone seeing up for social security and medicare. people living longer, accessing medicaid. and it's not like there is any money in the social security trust fund or the medicare trust fund. it's all been spent. and what this is having on the budget is tremendous. if we don't get a hold of us, we are mortgaging our children's future and i am not going to be part of it. >> you say you are not going to be part of it. you are kind of stuck in given the job you have. >> i'm not going to be part of further mortgaging their future. >> right. >> time to get serious about our debt. >> what about the trillion dollars, though? is it fair to count that as part of $4 trillion in debt reduction? >> it can be part of the package if they want to count it.

but where are the next three, four, five trillion dollars worth of reduck that is need to happen to put america on a fiscally sustainable path. let me think about the proposal we got from the president. if he with gave him $1.6 trillion of new money, what do you think he would do with it? he would spend it. that's what washington does. >> you don't think he would use it to help pay down the debt? >> he will spend it. look where he put up the unspecified cuts up, and yet at the same time that's over $400 billion over ten years. while he wants over $400 billion in new stimulus spending. this is -- it's a nonserious proposal. >> you talked about the fact that the president won and you came out with a concession the day after the election. they point out that the president campaigned on raising tax rates. you know, it was the big issue between him and romney and they said just as he had to cave

after your victory in the 2010 mid-terms, now it's your turn to cave on tax rates. >> listen, what's the difference where the money comes from? we put $800 billion worth of revenue, which is what he's asking for, out of eliminating the top two tax rates. but here's the problem, chris. when you go and increase tax rates, you make it more difficult for our economy to grow. half of that income is small business income. it's going to get taxed at a higher rate. as a result we are going to see slower economic growth. we aren't going to be able to cut our way out of this problem, nor can we just grow our way out of the problem. we have to have a balanced approach. what the president wants to do is slow our economy at a time he wants the economy to grow and create jobs. >> the white house says that while you have given this kind of talk about, well, let's close loopholes, let's limit deductions, you haven't offered any specifics, have you? >> we've laid it all out for him

a dozen different ways you can raise the revenue from the richest american, as the president would describe them, without raising tacks. >> what's the biggest proposal you have put on the table since the election in terms of raising revenue from closing loopholes and deductions? >> oh, you could cap -- there's a lot of different ways to get there but you can cap deductions at a% of income would be one way to get there. you can eliminate certain deductions for those, the wealthiest in our country. could you do all of that. >> let me ask you a couple specifics. would you eliminate or limit the home mortgage deductions? >> there are a lot of options in terms of how to get there. i'm not going to debate this or negotiate this with you but if you could sign the bill into law i would be happy to. >> we are trying to get those, but we haven't yet. charitable deductions? you are a wig charity guy. >> listen, the president has seen a lot of the options from us. a lot of them are put on the table and i'm hopeful the conversations will continue. >> okay. but let's talk about your

proposals because the president, and i'm sure this has driven you nuts, like to say the math tends not to work. let's look at your math. the white house says a realistic cap, and i'll explain what that means, of $25,000 on people making more than $250,000, a cap on their deductions, you can only take $25,000 in itemized deductions and exempting things like charitable deductions which is pretty unlikely you will do away with that, would only bring in $450 billion. not the $800 billion you are talking about, not the trillion dollars. $450 trillion. they say the math tends not to work. >> the white house knows that the math will work. to put the kind of revenue on the table that we've been talking about. it won't work if we are trying to get to $1.6 trillion. i'll guarantee you that. but we've put the revenue on the table. again, a dozen different ways in order to get there without raising tax rates. >> you can get up to what amount? >> basically the number that we've been -- >> $800 billion? >> somewhere in that range.

>> the white house, talking about specifics, also says that you and the republicans have offered no specifics for spending cuts or entitlement reform. have you? >> chris, you look at the house of republican budget offered by paul ryan in 2011. the same budget in 2012 passed the congress. all types of specific proposals. i go back to the -- >> but the president campaigned against that and he won. >> going back to the super committee. all of the ideas were out there. look at the conversations that the president and i had based offer the simpson-bowles commission. his own deficit reduction commission. he knows what our proposals are, he knows what we are throwing do. what we don't know, chris, is what is the president willing to do? >> well, let me ask you specifically about that. is it true, because it's been said but we've never seen a piece of paper; it true that the president offered to raise the eligibility age for medicare and to slow cost of living

adjustments for social security what you were in your debt talks in august ofs2011. >> it was on the table. did the president agree to it? it may have been close to an agreement to it. if he agreed to it we might not have some problem today. >> is that on the table now. of course, it's on the table. >> no, is it on the table from their point of view. >> well, there are a lot of items on the table. the president knows what they are. the question is what are they willing to do. >> you are starting it have some political problems because you are starting to have some split necessary your ranks. i don't have to tell you one of the top congressional republicans, tom coles, said i'm not comfortable standing in the way and holding hostage the 98% of the people, and you weren't happy he said that. >> no, i wasn't. >> because it means you are breaking ranks. but isn't it tougher to hold to

that as you are getting closer to the cliff and people are facing a tax increase of $2,000. >> that's what is so a sad about the situation we are in. the president not being serious about coming to an agreement, holding the middle class tax hikes over their heads. >> you are doing it. >> this is america. this is our economy. we all want the economy to get better and americans to have more opportunities at jobs. this agreement should come sooner rather than later because just the threat of the fiscal cliff is already hurting our economy. now listen, i believe that raising tax rates hurts our economy, hurts the prospects for more jobs in our country. and i realize the president may disagree, but the fact is if there's another way to get revenue from upper income americans that doesn't hurt our economy, then why wouldn't we consider it? >> what if we go over the cliff. doesn't the president hold all the cards then? can't he say, all right,

everybody taxes have increased. i'm offering 98% a tax cut of $2,000 a year. you are the party of lower taxes. are you going to refuse to cut people's tacks? >> nobody wants to go over the cliff. that's why the day after the election i tried to speed this process up by making the concession to put revenues on the table. it's unfortunate that the white house has spent three weeks doing basically nothing. >> so you have been around this town a long time, you have been in a lot of negotiations, what is there game? what is their thinking as to how they are going to work their will? do they just figure they won, they are going to get what they want? >> i have no idea, chris. if i knew, i would share it with you but i don't think what they are thinking. >> do you think they are being bullies? >> i think they won the election, they must have forgotten that republicans continue to hold the majority in the house. but, you know, the president's idea of a negotiation is roll over and do what i ask.

we need to find common ground and we need to find it quickly. >> and again, because you kind of didn't answer it the first time, what are the chances we are going to go over the cliff? >> there's clearly a chance. but i'm going to tell you, i might be an easy guy to get along with, affable, obviously i've worked in a bipartisan way on a number of agreements, but i'm going to tell you one thing, chris, i'm determined to solve our debt problem. we have a serious spending problem and it is going to be dealt with. >> and if the white house is unwilling to do it, are you prepared to say. >> we are going to deal with america's debt problem. >> and if they refuse to do it in the way you find acceptable? >> we are going to deal with it. >> sooner or later. >> sooner or later. we are going to deal with this debt problem and we are going to do it now. we aren't going to kick the can down the road again. >> so if it takes it, you will

go over the cliff? >> i don't want any part of going over the cliff. i'm going to do everything i can to avert that. >> but? >> we are going to solve america's debt problem. >> speaker boehner, on that happy note, thanks for talking with us. >> thank you. thank you. >> up next, we will bring in our sunday group. where do they think negotiations stand? and will there be a deal before we reach that cliff? for 30 some years at many different park service units across the united states. the only time i've ever had a break is when i was on maternity leave. i have retired from doing this one thing that i loved. now, i'm going to be able to have the time to explore something different. it's like another chapter.

flush. >> it's sort of like the lump of coal you get for christmas. it's a scrooge christmas. >> i mean, it was not a serious proposal. so right now we are almost nowhere. >> president obama accusing republicans ever being willing to raise taxes on 98% of americans, while speaker boehner said it's the president when is unwilling to compromise. it's time now for our sunday group. bill crystal of the weekly standard. marcha liason and ed rollins and former democratic senator that

you heard. >> each of them are saying they are being reasonable and it's the other side's fault. you have been through your share of washington negotiations. what strikes you about what you heard today? >> i think they both made their case well but i think geithner is in a stronger position in this respect. the president is the president. he can maneuver, he can say my $1.6 trillion and he can say $1.2 trillion. speaker boehner has 135 members. they don't hop to it when he decides to move. he's in a tougher position structurally. in these show downs the white house usually wins and the main reason they win is it's a unitary executive. and congress is in a weaker position. >> all right. >> what happened this week is interesting. both sides are putting out their maximalist position and telling what they will do before they

cave. the republicans are going to have to move on tax rates, not just revenues, and the democrats are go going to have to do a heckuva lot more on entitlement reform than what is in the president's proposal. that's what's going to happen when the deal is done. each if it haupt after january, after a couple failed votes, after a little bit of falling off the cliff. i continue to believe that that is what is happening, not that this thing is going to end in complete disaster. >> i have to say, yeah, and part of this comes from having talk to the two men. what struck me is how genuinely boehner seemed to be from the proposal he got from geithner, how little there was in terms of spending cuts, how little there was in it in terms of entitlement reform and also the new demand that seemed to come out of nowhere that congress gives up their power over the debt limit. is there the possibility here that the president is overplaying his hands? >> certainly on that last issue, which is absurd. no congress is ever going to give up the power to is he the debt limit and i'm not sure they

can because the constitution basically gives them that power. at the end of the day my sense is they are talking at each other and not to each other. this was a status quo election. the president had a great re-election and the republicans held the house and democrats the senate. they have to sit down and do negotiate. it's not boehner versus geithner. it's can the house republicans buy a plan that they cancel to their members. and will the senate go along and if so will the president sign it. until you get in a room and discuss the elements you get people talking at each other with some absurdity. we are talking about $85 billion a year in added revenue over a ten-year period. we are spending over a trillion dollars in debt every year and not putting anything into it. the republicans have been down the road before where they have been promised three for one, and it never happens. i think they are beginning to realize until it's actually on the table and signed off on by

all sides they aren't going to buy into it. >> senator, did the president in this offer with so little in spending cuts and tax reform, the debt limit, did he overplay his hand or is he being realistic as bill seems to suggest that he has that much leverage? >> i think both. i think this is likely the theater. these are the opening offers in longer negotiations. if it was easy it would be done by now. you are seeing basic philosophical differences on the two parties but at then of the day they have to make a deal. i put the odds at about 730% they do and 30% they don't. >> before the end of the year? >> yeah, and the reasons are a couple. number one, it will go all the way to the end. it always does in legislative body. the reason for that, you have to show your base you are fighting to the very end and not giving in. also it limits the amount of gulf you take when you compromise from your base. but at the end of the day you don't get a deal because the political reality suggests they

have to get a deal. the president gets most of what he wants because he won. 55% of the american people will blame the republicans if they don't get a deal. but statement the president desperately needs an extension of the debt ceiling. he also wants to get this off his back so he can go on to other parts of his legacy. that's why i think at the end of the day they will have an agreement. >> are you as optimistic as that, bill? >> i think so. and i was struck about what the president said. the republicans are at real risk, remind you, of looking like they are defending, keeping the current tax rates for the well think, the bush tax rates for the wealthy and right now the official republican position is let the payroll tax rate go back up by 2%. that's a two percentage point increase on every american and it's a marginal increase on everyone making less than $100,000 a year. i really worry that president obama, we consider that he's overreaching, it's too much, you know. at the end of the day president

obama is selling a very simple message. i want to keep taxes low for middle class americans and republicans, i'm worried, are in the position of looking as if they don't care about the middle class and want to keep tax rates low for wealthy americans. >> one of the things that struck me in my interview with tim geithner, the republicans were a little unclear. he said the bush tax rates had to go up but not all the way up and geithner said they had do have to go up to 39.6%. >> i still think the white house is willing to settle for something in the middle there above the bush tax rate but maybe not all the way back up to clinton, maybe not 250 and above, maybe 500. i think there are moving parts there. i think he says in every speech he goes out there and gives the hard line message to the base i'm not going to be the woos you thought i was last time. he says i want to compromise and we all have to get out of our comfort zone. i want a deal. >> and republican senate leader

machine mcconnell added another wrinkle to this after our deals in the wall street journal he said he wanted structural entitlement reform to both medicare and social security like the president was offering back during those big debt talks in august of 2011. but the president and democrats seem in no move to revisit those kind of big structural entitlement reforms. >> i think you are correct and mcconnell is correct. if you don't get them at this point in time and commitment to go do it, it's not going to happen. the one thing we do know, if we go over the cliff it's not going to help our economy. it will probably dump us back in another recession and i don't think anybody wants that. at this point in time, though, for the long-term structural changes that need to be made, now is the time to do it. which is why i think they need to sit down and negotiate this team as opposed to yelling and screaming back and forth. this is relatively short term. whatever the president is going to do, it doesn't resolve the trillion dollars a year deficit and the long-term structural

things and we have to basically take advantage of this disadvantage, which is facing the cliff, which is an idiot tick things they got themselves into to begin with, and make something positive out of it. >> we have 30 seconds. but it certainly doesn't seem like the president, and especially liberal democrats, unions, they don't want to go back to entitlement reform, big structural changes, raising the retirement age, changing the cost of living. >> of course, they don't. that gets back to the philosophical differences. but i think at then of the day, this is a leadership moment and i think the president will pleasantly surprise some sceptics and step up and on means testing the benefits and the cola increases being more modest, and maybe to get a deal. >> you think he's willing to take on his base? >> i do. in those discussions with boehner, as the speaker just indicated, that was on the table. that's not -- i think to get it resolved and a significant increase in the debt ceiling the president is going to have to give something there and i think he will and that will pleasantly

surprise some people. >> that's a happy, optimistic note. we will take a break, panel. when we come back, the palestinian won a victory at the u.n.. egypt fights over a new constitution, and susan rice tries to win over credit nicks the senate. -- critics in the senate. care ss and plans including aarp medicarecomplete, insured through unitedhealthcare. call today to enroll. these medicare advantage plans can combine parts a and b, your hospital and doctor coverage... with part d prescription drug coverage, and extra benefits... all in one complete plan... for a $0 monthly premium. no more than what you already pay for medicare part b.

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>> i left that meeting with less of a feeling about her judgment and about her suitability to be secretary of state. >> moderate republican senator susan collins still expressing

doubts after meeting with u.n. ambassador susan rice and we are back with the panel. it's fair to say it sure seemed like susan rice was on a prenomination charm tour to try to disarm some of her republican senate critics and smooth relations before the president names her secretary of state. senator, why do you think it went so badly? she certainly didn't disarm the critics, and at this point do you think it would be a mistake for the president to name her secretary of state? >> why it went badly, chris, i don't know. i wasn't in the room. whether my friends, senator mccain and graham were willing to be charmed, that's a very open question. >> susan rice is a pretty steady hand. and i'm not saying that mccain and graham around but she plays it pretty much down the middle. >> the most concerning thing about this was susan collins. if the republicans choose to filibuster it, you need five

votes and susan collins is one of them. that was somewhat concerning. i do think susan rice is getting a bum rap on this. and i would urge my colleagues that are talking about weapons of mass destruction to have some humility. anybody who would come on this show or others, whether the secretary of defense, state, cia, would have been put in a similar situation. the real question is is there any evidence of intentional deception? is there any evidence of a political coverup? to date there's not. and we focused on why was the security so poor at that facility? >> you don't think the president would make a mistake taking on this fight? >> he's on a dilemma here. if he doesn't nominate her he looks weak and if he does, he has a fight on his hands and a polar rising secretary of state nominee. >> ed? >> i'm not a big rice fan but i

think if the president wants to hut her as secretary of state it's his prerogative. it will be a knock down, dragout fight but at the end of the day i think he will win it and we will move forward. >> let's move to the overwhelming vote at u.n. this week, 148 to 9 to recognize palestine as a, quote, nonmember observer state. mara, what does that do for the palestinians, what does it mean in terms of the israeli-palestinian peace process? >> a big boost for the palestinians. they were thrilled and this is something the united states didn't want to happen. they were unable to stop it as is many things in the middle east not under our control. i think at least in the aftermath it looks like it makes a settlement between the israelis and the palestinians harder to reach because the israelis immediately went ahead and announced blueprints for more settlements that would make it harder to have a palestinian state if there ever was one.

it's probably a step forward for the palestinians and a step backward for the peace process. >> let me explain. israel announced the day after the vote they are going to build new settlements east of jerusalem that would split the west bank and that's something the palestinians are very upset about it. when you add that to this vote, where are we in the possibility of any peace talks? >> we don't have much possibility. the palestinians want to control all of even what the u.n. would like to think is palestine. and gaza which is controlled by hamas and seems to be getting stronger in the west bank. interesting things to come out in the last few days and during the gaza conflict, amos placed several phone calls to egyptian president morsi and he refused to take the calls because he wants hamas to be stronger. and we are so close to falling over a real cliff into total chaos because of u.s. weakness that i think is trivial, the

u.n. vote or where israelis build 2,000 house ons the outskirts of jerusalem, no one will remember that a few months from now. >> when they did that, that was against the u.s. wishes. they defied the u.s. wishes to so nobody seems to be listening to them. and there's egypt. and the continuing protests in egypt. thousands of the people who were demonstrating a year or so ago against mubarak, now demonstrate being against the new egyptian president morsi and the new draft constitution written by an islamist assembly. and people say it doesn't provide enough guarantees for women's rights or minority religion you make of the situation in egypt and the dangers it could turn into an islamist state? >> the bottom line in egypt is it's bad for the egyptian in their political future. probably not as bad for the long-term interests of the united states. anytime a leader like morsi puts

himself above the judiciary, that's not a good sign to democracy. anytime you put that language in there, it's not good for their democracy. it's troubling not only for egypt but for the long-term events in syria where things are more polarised because of the violence there and the possibility of an islamist state there. but the more encouraging news is the brotherhood has shown they can behave a little more. >> the brotherhood of which morsi was a member of. >> and when he first came in they called to ban alcohol but they didn't because of tourist dollars. and to segregate beaches and they didn't do it bus they were concerned about the economic realities. they need western aid. and the the gaza conflict. they behaved responsibly and tried to bring things to a conclusion. there is evidence that while they may be throwing some bones to their most fur vent supporters in terms of constitutional language, and that is concerning, at then of the day when push comes to

shove, they may behave more pragmatically. >> bill, your thoughts about egypt. are you as optimistic? >> i don't know. i don't think iran doesn't ban alcohol to my knowledge and they have beaches that are men and women mixed and they still have nuclear weapons threat egg the world so i am worried about egypt. and we're in retreat everywhere and we are now seeing the prize. we didn't see the prize the first four years because we were living off a lot of inherited capital. but look at syria. total chaos and killing there, look at egypt. we will get out of afghanistan and the signal that sends will be disastrous. i haven't seen a more worry some moment of u.s. weakness and chaos following. >> on that note, i'm not sure -- >> well, thank you panel. see you next week. don't forget to check out panel plus where the group picks up with the discussion on our website, foxnewssunday.com. we will post the video and be sure to follow us on twitter. up next, our power player of the

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>> she's one of those young women that has it all, beauty, intelligence, and she's carrying quite a burden. hears our power player of the

week. >> choosing life over what society or hollywood tells me makes me beautiful. >> allen rose is miss d.c. competing for the title of miss america in january. but she's not your typical beauty queen. yes, she's worked as hard of any of her competitors to develop her talent. or tis tick figure skating and a fitness for the swimsuit competition. >> i've worked hard to showcase my talents and your beauty and intelligence >> but after the pageant she face as difficult choice. and at age 24 she's made her decision. >> i've decided to have a double mastectomy and what that means i will have my breast tissue removed in an effort to help prolong my life. >> to understand her decision you have to go back a few years to her mother, judy. >> how old were you when you lost your mom? >> i was 16 and my mom was diagnosed when i was twelve. i spent the pinnacle years of me

developing into a young adult having a mom battling breast cancer. >> what makes is more difficult is her mother had a single mastectomy when she was 27 but refused to have her other breast removed. >> my mom never saw me get my driver's license. she didn't see me graduate from high school. >> it turns out the women in allen's family have a history of breast cancer and now she has learned she has the same genetic disease they did. >> to know that i am going to walk across the miss america stage and not have any mom there, it's fueled the fire within me to know that that's not a life that i ever want my children to live. >> allen's platform is miss d.c. and if she's selected as miss america is early breast cancer prevention. she calls it planning a marathon running a sprint. once again, it goes back to her mother, who used to run marathons. >> he said that's my goal in life, i want to be 100 years old. but my mom's plan for 50 years old turned into a battle for

three. what happens when your marathon turns into a sprint? >> so ever since she was named miss dc in june, she's carried her mother's loss and legacy. >> when they announced my name it felt like all of my mother's dreams for me have been realized and my own dreams for myself. >> she knows what she faces after she completes her duties in these panelingens. but one thing she doesn't do it feel sorry for herself. >> you are beautiful, you are accomplished, you are smart. >> thank you. >> do you ever think why me? >> no. because i know that i have been given these blessings. i think that i have been given this incredible opportunity to help save the lives of other women. by having this message of my mom and being able to show women that, you know, if i can to it, you can do it. >> in college allen rose majored in government and she interned on capitol hill. after her pagean